Home prices surging in Massachusetts; open houses mobbed

Home prices are rising across Massachusetts this spring in a reflection of demand that is outstripping supply. There are fewer than 20,000 single-family homes on the market, down 30 percent from 12 months ago, the Massachusetts Association of Realtors said this week.

But as the couple looks for a home closer to Tom’s workplace west of Boston, they face the same dynamic.

“I can’t tell you how many open houses we go to and then the next day they’re gone (off the market),” Sarah said.

The strong seller’s market that has emerged this spring is a double-edged sword for families like the Kotowskis, whose house was on the market for less than a week.

Home prices are rising across Massachusetts this spring in a reflection of demand that is outstripping supply. There are fewer than 20,000 single-family homes on the market, down 30 percent from 12 months ago, the Massachusetts Association of Realtors said this week.

Median single-family sales prices have now risen for six straight months. In March, the average sales price for a single-family home was $290,000, up 8 percent from March 2012.

The shortage of inventory has made it more difficult for existing homeowners to find trade-up properties, and, in so doing, generate a fresh supply of entry-level homes for sale.

That hasn’t stopped househunters from testing the crowded waters as the spring market gets into full swing.

Buyers jammed the Kotowskis' house Sunday after spotting the listing. Young couples dominated the crowd of visitors that moved through the recently-renovated home.

Sue and Andy Maynard, who live on the North Shore, said they have been looking for six months and haven’t been discouraged yet.

“It’s a good time to buy,” said Sue Maynard, who is expecting the arrival of their first child.

Kara Lovejoy and Dan Asher of Brighton said they want a move-in ready home with recent updates. They were interested in the Kotowskis' home because of its backyard porch and relatively low asking price.

“I just want a nice floor plan and something that’s updated,” Asher said. “I want it to be move-in ready.”

The Kowalski’s installed a new kitchen and bathroom, refinished the floor and put in new windows last year. To stage the home for the open house, Sarah removed some decorations.

“I just went through with an eye that people don’t necessarily want to see all my pictures on the wall, so I took a lot of stuff off and tried to make it look like a place anyone could move into,” she said.

Page 2 of 2 - While the Kotowskis have owned their home for 10 years, many homeowners who bought closer to the market’s peak in 2005 may not have the same flexibility.

Homeowners with negative equity – homes worth less than their mortgage – are one reason that more homes aren’t going up for sale.

“Negative equity is definitely a big part of it,” said Stan Humphries, chief economist for Seattle-based real estate researchers Zillow Inc. “We would have more people willing to put their homes up for trading in the market if they weren’t under water, and that would essentially provide more liquidity in the marketplace.”

Seller psychology also factors in, Humphries said.

“All the buyers want to buy at the bottom of the market, but none of the sellers want to sell at the bottom,” he said.

Housing values peaked in Greater Boston in 2005 and bottomed out in November 2010, according to Zillow data.

Massachusetts’ communities often-restrictive zoning laws also have suppressed the supply of housing, particularly in the lower price tiers.

Massachusetts homebuilders took out fewer building permits in 2012 than they did in 2010, real estate publication Banker & Tradesman reported this month.

Attempts to build smaller, more affordable homes in Boston suburbs have been thwarted in recent years.

In 2007, developer Nick Mirrione tried to build 1,000-square-foot cottage style homes in Easton. At the time, Mirrione planned to sell the houses for $240,000 to $350,000, but town meeting rejected the higher-density zoning.

“He couldn’t get past the homegrown bias against housing of that density in these towns,” said Lisa Prevost, author of the recently-published “Snob Zones: Fear, Prejudice and Real Estate.” “He wanted to put seven houses per acre and people just couldn’t imagine it.”